Should you finance a new Peloton? Experts weigh in on how to afford fitness at home

Select ’ s column team works independently to review fiscal products and write articles we think our readers will find utilitarian. We earn a commission from affiliate partners on many offers, but not all offers on Select are from consort partners. uncertain whether to dip into your savings or swipe your accredit calling card to cover your future major purchase ? Email reporter Megan DeMatteo at megan.dematteo @ to share your approaching purchase and wonder to be part of CNBC Select ‘s new “ Cash, credit or loanword ? ” series. A popular choice to stay fit during quarantine, Peloton bikes are more low-cost than always thanks to wallet-friendly packages and payment plans available through the democratic point-of-sale finance company Affirm.

Bikes run from $ 1,845 to $ 2,495, with add-ons like clip-in bicycle shoes, weights, immunity bands, workout mats available depending on the package. Payment plans start deoxyadenosine monophosphate low as $ 49 per month for the Peloton Bike plan and increase to $ 64 per calendar month for the Peloton Bike +. Regardless of the plan you choose, you ‘ll pay for the bicycle over 39 months ( barely over 3 years ). Given the social distance limitations of the pandemic, Peloton ‘s finance options might be an low-cost way for person to achieve their fitness goals without leaving home. But is financing a fitness motorcycle better than paying for it with cash ? Ahead, CNBC Select spoke with two certify fiscal planners to get their remove on how to select the correct requital method for your wallet .

Alicia R. Hudnett Reiss, CFP

Washington, D.C.
Pay cash or finance? Either ( with a few caveats ) “ If person has the income and cash menstruate to make a large leverage outright in cash ( and is besides on track with savings ), then I think that ‘s finely, ” says Alicia R. Hudnett Reiss, a D.C.-based fiscal planner.

But some individuals do n’t have a collocate sum of cash to purchase a big-ticket item, she says, so they have to finance it. And even when you ‘re in a placement to pay cash, spreading out the cost through finance has its benefits. Hudnett Reiss recommends you consider a few factors :

  1. How much will the bike ultimately cost including all of the interest charges? Since Peloton advertises 0% APR for its financing plans (subject to credit approval), you can finance your fitness bike without paying interest. There’s no financial incentive to pay cash, other than being able to put the expense out of mind for good and move on.
  2. Be aware there is a credit check. When you apply for financing, Affirm will do a soft pull (meaning it won’t ding your score), and your credit score will impact your interest rate. Peloton advertises 0% APR, but it states on the Affirm website that your payment plan may include interest between 10% and 30% if you don’t qualify for 0%. The soft pull will show you what rates you qualify for, and you’ll have the chance to accept the loan (at which point your activity may be reported to the credit bureaus) or walk away and pay for the Peloton using another method.
  3. How long will you finance it for? The financing for Peloton bikes is three years, but the bike should last much longer than that. In general, you don’t want the financing to outlast the actual use/worth of the item you are purchasing. Take travel, for instance. It doesn’t make sense to pay for a two-week vacation with a loan that you have to pay back over two years.
  4. How often will you use the item? “I bought my treadmill about six years ago, and I literally use it every single night,” says Hudnett Reiss. “It’s well worth the price!”

“ overall, if you finance the Peloton for three years ( specially at no interest ) and keep/use the bicycle many years beyond that, then it may very well be a smart fiscal decision. ”

Jeanne Fisher, CFP

Nashville, TN
Pay cash or finance? Finance

“ A 0 % finance offer is baffling to beat, ” says Jeanne Fisher, a Nashville-based certify fiscal planner. “ You should decidedly pay attention to the fine print. Most probable there will be stiff penalties for late payments or a default lend, ” she adds. affirm does not charge fees, according to its web site, but your behavior may be reported to the credit agency and consequently impact your credit rating score. Fisher argues that a 0 % interest rate is basically the ability to borrow money for free : “ From a strictly opportunity cost position, it may make sense to accept the lend and invest the cash you do have in something that could grow. ”

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Category : Finance

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